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We have a very long experience providing financial tools for investors. That’s why we publish regularly posts about our solutions, because we have always detected that users do not take advantage of many gadgets, features and details developed for them to a better management of their portfolios.

Do you know what kind of financial transactions you can do in T-Advisor? Let’s say that you have your portfolio and you add some assets: either stocks, ETF or mutual funds. The usual operations are “buy” and “sell”. Those are easy, but there are quite a lot of them. Think about that:

If you have funds, you maybe think to transfer from one to another. There are transactions of buy and sell, but transferring the money, not a payment or refund with cash.

What about stock dividends or bond coupons? If you receive those payments, you have to register that increase of capital.

In the case of bonds, they can be cancelled or they can expire, with the subsequent effects in your portfolio.

Again, what refers to shares or ETF, there can also be splits and sold of rights.

However, there are also movements linked to cash, because a portfolio has an associated account. Let’s only think about the different charges that you can register. We show you in this list:

Not bad, huh? T-Advisor has several functionalities that deserve to speak with more details. These are some of them. An investor need a tool that has the right features to register all kind of movements related to his or her assets. This is the way to improve your independent wealth management. This is a reason why we say that we make available professional tools for self-directed investors.

We have several times mentioned that T-Advisor has its own scoring for the assets. It is like the old marks that we got in the school, but this qualification is linked to our investments.

T-Advisor has a module that shows the best assets classified by the score. The question is: Should I include these assets in my portfolio? In fact, this is a good idea, but we do not have to forget two things:

Past performances do not guarantee future ones.

We have to be watchful of our investments, because markets change continuously.

If we look at our monthly top score (that we publish in this blog), we have always found interesting stocks and funds, because they usually have high performances. This fact is clearer in stocks than in funds (specially, in fixed-income funds).

However, it is interesting to see the evolution. It is not usual that top score assets repeat. Markets are naturally unstable, but instability does not mean something negative. It just means that there are continuous ups and downs and investors should regularly look into and watch their portfolios.

Our top score specifies the best performing assets with our best score in a specific moment. They give us clues about countries and sectors that are moving positively. Our score detects also these changes and includes them in the qualification. That is why our score is also live. It is not a mark that provides a position for a long term. On the contrary, it is always near the reality and sudden changes are also detected and included.

Top score assets provide guidelines about possible interesting movements, but investors do not have to move their strategies to certain assets guided by the moment. They have to look at the long term, instead of short-term impulses.

So, if you finally ask: then, what to do with the top score assets? In or out of my portfolio? The answer is: it depends. Check if they match your investment strategy and read the full T-Report. Then, take the decision and check regularly your portfolio and the changes in the scoring in the assets.

We have already written about some relevant figures to manage your portfolio, as the performance evolution, the weight of the assets and the relationship between performance and volatility. There are three other parameters to take into account for your portfolio. They are related to the diversification of the portfolio assets.

It is always said that diversification limits risks and helps avoid high losses. It depends on how it is considered. For instance, you can have several assets, but it does not mean that the whole portfolio is diversified. On the contrary, it can have a low diversification, if the assets are very correlated. In this case, a movement in one of your securities has effects in the others.

Another relevant item to obtain from your portfolio is the risk contribution. These figures explain the proportion of each security to the whole risk of your portfolio. This analysis helps take decisions, as selling a share or a fund if the risk is high related to the performance that it provides to the whole investment.

In the chart above, it is possible to see the different risk contribution of each share to a specific portfolio focused in Germany. If we compare this chart with the weight of each asset, IWKA is the largest, following by Dialog Semicon. However, both have provided the highest unrealised gains (59% and 46%, respectively). On the contrary, BB Biotech AG has unrealised losses of 78.5%, but the weight is 1.83% of the portfolio. That is why its risk contribution is so low.

Finally, the last measure about diversification is diversification benefit. We have already commented about it, but it is interesting to connect this figure with others to analyse the portfolio. Diversification benefit quantifies how much you earn or how much you avoid losing if you diversify your investments.

As the table shows, a diversified investment protects against higher risks, if the investment cycle is negative for you. In this case, the investor is avoiding losing a 24% more.

In T-Advisor, you can also check your diversification in the “follow up” tab of your portfolio report.

As you can see in both articles, it is necessary to analyse your investments from different points of view and connecting different figures to understand the quality of your portfolio. If you do not understand some of these figures, you will have to deal with troubles for your money.

It sounds very nice when you think that you have your own investment portfolio. It is an important step to improve your finances and get your goals. The question is that a portfolio has its own life since its inception and your responsibility as investor is guiding the portfolio to your interests. What are the signals that you have to follow?

Well, there are many figures and parameters to measure the quality of your portfolio, but we will select the main ones in order to get the most important data:

The performance evolution: the figure alone is not enough, because it has to be put in comparison to others. We recommend comparing it with the smart benchmark. This comparison provides the view to understand if we have chosen the right assets or not. For instance, this example shows that we are far from the benchmark and there is a wide improvement to manage.

The weight of the assets in your portfolio: it is also relevant to understand the allocation. If we have a concentration in a country or a sector, there is a high risk to suffer from instability, if the trend changes. Diversification reduces risks, but we can have some assets with lower returns. A good analysis can help us look for similar assets with better figures in order to rebalance the portfolio.

The relationship between performance and volatility: first of all, volatility does not mean necessarily more risky, as we have already commented. However, we can understand the connection between performance and volatility through the Sharpe ratio. This figure shows how profitable an investment is related to the historical volatility. The higher the ratio is, the better the investment is… but this idea is not totally right if we do not compare two assets. You can find two assets with similar ratios but with different figures. We have to look into the numbers to understand if it has a high performance with a high volatility.

Think about your portfolio. It does not perform as you would like and you do not know how to implement changes to improve the returns. Should you read all kind of reports? Of all possible assets? That’s nonsense. There should be a method to optimise and change efficiently your portfolio. There is actually and method: portfolio optimisation.

When we talk about it, it means the process of choosing the weights of different assets for your portfolio in order to obtain the best possible returns compared with similar portfolio compositions or risk profiles. The main measures taken into account are the expected returns and the expected volatility. Optimisation systems include limits of accepted volatility and weight per assets.

The system is linked to the Markowitz Efficient Frontier model that pretends to guide your investments maximizing your performances and reducing the risk. The main point that supports this model is choosing low-correlated or uncorrelated assets. Smart diversification is the idea behind it. An efficient portfolio means a well-diversified one.

Optimisation systems are professional tools to improve the portfolio results, but it has been implemented in T-Advisor for individuals. It is not easy, because you have to play with the following indicators:

Asset correlation

Maximum volatility

Expected return

Maximum weight per asset

The smart combination of the four indicators provides the success of the investment. They can change depending on your risk profile, but accepting a higher risk does not mean being suicidal.

There is also another very important point: the costs. If you optimise your portfolio and follow the results of the optimiser tool, you have to rebalance your portfolio. A rebalance means trades to buy and sell in order to compose the portfolio following the optimisation indications and… it has costs. However, we have to remind that investments are for long-term and rebalances should be executed every certain time. In these cases, costs can be balanced out with the improvement of the returns. If you are a day trader, then forget this, because you are other kind of investor.

We usually write about how to create a portfolio, how to manage it, where to invest or how to include changes in our investments. That’s fine, but we cannot forget that we build and manage a portfolio to reach a financial goal. It can be to buy a house or a car, to save for holidays or the studies of our children or just because we look for a higher return or diversifying our wealth.

T-Advisor last upload tries to cover that point. We have already written about our investment planner, but we missed in that moment a point in which we have work later: how to link that plan with your personal portfolios. You can do it now with a simple click. We explain it easily at the beginning of this video:

A bar reports also if you are on track to reach the target. A relevant point is that you obtain a list of several figures about your goal and its balance. The system is also flexible, because it implements two tools:

An edition tool to change the portfolio linked with your goal at anytime.

A chart to compare your current portfolio allocation with the ideal portfolio allocation for your goal obtained in the planner.

Investments must have a meaning, because nobody invests for nothing. We all have dreams and aims to satisfy and they need money to be accomplished. Investment is a way, but smart investors need the right tools to obtain them successfully. T-Advisor has developed these tools to complete the global process, so that any individual can plan their goals and assign a strategy to achieve it. Now it is your time. What are you waiting for?

T-Advisor is a non-stopping machine of innovate ideas to promote easy investments for all. We have opened a channel with tutorials in Youtube and Vimeo where everybody can check how to use all the tools in our platform.

For instance, let’s begin with the creation of an investment portfolio. We have already written about it, but you can get an idea of how easy it is just watching this video:

Now, let’s discover what information you can obtain in T-Advisor to manage your portfolio and make savvy changes to reach a better performance:

Easy, simple, with relevant information, only a few steps: this is T-Advisor, your set of professional tools for smart, independent and self-directed investors.

Risk profile matters for investors. It is relevant information, because anybody has the same standard to resist the market changes. When we speak about risk profiling, we mean a process for finding the optimal level of investment risk for an investor, considering three items:

Risk required: risk associated with the return required to achieve the investor’s goals from the financial resources available.

Risk capacity: the level of financial risk the investor can afford to take.

Risk tolerance: the level of risk the investor is comfortable with.

The three components are different faces of the same process. For instance, you can be very aggressive in investments (risk tolerance), but without very much money to invest, because you are very engaged with different kind of expenditures, as a mortgage or children (risk capacity).

Investment authorities in different countries have developed several standards to test the risk profile for individuals and these tests are required to banks, wealth managers and financial adviser with their customers. These tests ask for the experience, the knowledge and the strategy. An individual with low knowledge and experience in investments cannot begin with complex products, because the risk of losing a huge amount of money is very high.

Risk profile means that individuals and their investments have to agree the same standard. From this perspective, the usual range comes from very conservative to aggressive. Usually, conservative investors prefer a lower performance if their portfolios suffer less changes and tend to keep their investments for a long term. Aggressive investors choose always a higher performance, although the assets suffer more changes and they have more probability to loss their money. They also look for short or medium-term investments.

What are the recommendations for conservative risk profiles in order to build their portfolios? Fixed-income assets (bonds, fixed-income mutual funds), cash, deposits and, if they are a bit biased to equities, the best are liquid stocks that pay dividends. On the other hand, aggressive profiles will look for equities (even in risky countries, as emergings or frontier), short-term assets and derivatives. They can provide high returns, but you can also loss everything.

What is the main recommendation over the ones above? Every investor has to honest with himself to accept his profile. If you lie yourself, you can be at a very high risk in investments. That is why you have to fill in a risk test, before you put your money in any adventure.

Shares, funds and ETFs, as assets, have their own ratios and figures that help us decide whether we buy or sell them for our portfolios. As we already have written, there are several measures, as performance, volatility, risk, technical analysis and many others.

But assets are not in a parallel world and they are affected by external factors. That is why an investor must always be alert to news. You can have a very good portfolio with a nice score, but sudden and unexpected facts can take place. This is a short list of some circumstances that can change everything in our positive portfolio evolution:

Macroeconomics: If we invest in assets from a specific country, we have to consider the evolution of the own country. GDP, inflation rate, debt and fiscal deficit are some figures to assess. When a company, for instance, depends on internal consumption, you have to follow the variation of global consumption in that country. Also, a high debt is a risk, if we have bought local bonds.

Sector evolution: When you invest in a company, you have to consider the global evolution of its economic sector. For instance, oil has been in the first pages in the first half of the year and that has effects in the value of oil companies. It also affects funds and ETFs linked to a specific sector.

Individual company evolution: balances, financial statements and, very important, investments and expectations about future business are some facts to follow.

Interest rates: We live now a weird situation, because official interest rates are around zero or even negative. Interest rates have a strong link with the interests that bonds offer. They also are a condition to assess the possible profitability of different kind of assets. If interests are high, investors possibly look to fixed-income funds, bonds or even deposits. If they are low, they will surely turn to equities.

Politics: Money runs away from instability and tries to rest in quiet places. Social unrest, political changes by elections or confrontations between countries (not necessary a war) are situations to take into account in order to decide the safest investments.

The unexpected: There is also a black hole with unexpected situations, as a terrorist attack, a company bankruptcy or a sudden crash in the stock market (who could predict the Black Monday in 1987?).

Yes, we can think that we have everything under control, that the portfolio ratios are impossible to improve, but investments do not only depend on internal figures. We live in a world where many things happen and several of them have huge consequences for our wealth. Would you mention other factors to our list?

Investors organise efficiently their investments in portfolios. That’s the rule, but the question is: how to follow up my portfolio? Can I preview somehow troubles in my investments? Which ratios should I take into account to set and allocate my assets?

There are some indicators that give us some clues whether we are right or wrong and the changes we have to decide:

Returns: of course, this is the first one. As investor, you do not have to be anxious about the short term, because volatility is our current rule. You should use a tool that provides you different terms in order to compare the evolution. However, you have to think about changes if the returns are negative in the middle term.

Comparison with other references: it is a good idea to compare the evolution of your portfolio with the benchmarks (an index or a smart benchmark). This comparison will help you evaluate a proportion of the profits or losses that you get and diminish or underline the importance of the result. For instance, if your portfolio losses 3% and your benchmark losses 5%, it is not so bad. You are better than the index, although you should consider change your strategy, it the negative trend intensifies.

Diversification: get charts about the proportion of the assets in your portfolio related to regions, currencies and asset category. A diversified allocation will help you avoid several risks.

Risk: this is actually the second most important indicator after returns. Analyse the volatility, the value at risk (VaR) and the risk contribution of your positions. A segmented analysis will focus better your next decisions. Should I keep, sell or buy? Another quite important figure is the Sharpe ratio to understand how interesting is assuming risks in order to obtain certain returns.

Trend: you should as investor use tools to get the portfolio trend, if bullish or bearish.

Portfolio and investor profile consistency: is your portfolio consistent with your investment profile, your risk tolerance and your expected returns? That is another question that you have to ask yourself.

You need tools to make a full analysis and obtain a whole view over your portfolio and take the best decisions to improve your results. It is important that you get unbiased indicators, watch risk and returns, understand everything and take rational decisions, never guided by a short term situation. At the end, it is not only about profits, but above all capital preservation. The T-Advisor platform offers these figures so that everyone can set and allocate assets their own portfolios in the most efficient way.